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The Chief Officers' Network - your business advantage / Management / Biz Law Central / Insolvency law / Insolvency: company fails to survive Ariff's special form of administration

When Malaysian conglomerate Berjaya Group bought 95% of Carlovers - a failed Australian car wash chain - from its administrator, Stuart Arif, in 2003 there seemed to be a decent business there.

But Ariff, who has since had his insolvency practitioner's licence revoked - had been taking slugs of money out of the company - and others despite his duty to protect the assets.

Ariff is presently awaiting trial on more than a dozen charges of defrauding companies which he was supposed to be taking care of and a further six of filing fictitious reports with companies regulator ASIC.

Carlovers was owed approximately AUD4.5 million from a variety of debtors when it collapsed. Ariff allegedly charged more than AUD13 million as his fees to recover those debts. And he kept the administration going for about four years so he could keep charging fees, it is alleged.

Australia is reviewing its supervision of the insolvency profession as a direct result of the Ariff case.

But for Berjaya, it's too late. Yesterday, the company gave up shoving money into the company to keep it going while it tries to get AUD11 million back from Ariff. It called in the receivers but, at the same time, a winding up order was made in the Queensland Supreme Court.

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